Corporate Japan continues to flourish as a variety of industries like electronics, machinery and trade ride the global economic recovery to higher earnings.
As of Friday, 39% of all listed companies with a March year-end announced earnings for the nine month through December. Of those 619 businesses, net profit rose at 69%, the highest level since 71% in April-December 2013. Aggregate net profit grew for the sixth straight year, climbing 36% on the year to 11.19 trillion yen ($100 billion).
Mitsubishi Electric’s net profit for the nine-month period soared 43% to a record 193.1 billion yen, as factory automation equipment sales were brisk for smartphone plants and factories related to electric cars. “Orders have topped prior-year totals for 17 straight months and will continue at a high level for the time being,” said Akihiro Matsuyama, senior vice president in charge of accounting and finance. The electronics maker also upgraded its net profit forecast for the full year.
Trading houses Mitsui & Co. and Itochu reported best-ever net profit. In addition to rising prices for natural resources like iron ore, profitability improved for products like food.
Technology companies benefited from expanding markets in such cutting-edge fields as artificial intelligence and the internet of things. Robot maker Fanuc upgraded its yearly net profit estimate as labor shortages stoke demand for industrial robots. “Global automation will not stop,” said Chairman Yoshiharu Inaba.
Shin-Etsu Chemical also lifted its net profit projection for the year, the first time it upgraded an earnings forecast in the middle of the year since fiscal 2007. Not only did profitability of silicon wafers improve, but demand for polyvinyl chloride in plumbing pipes also grew in the U.S.
Including companies that have yet to release April-December earnings, corporate Japan’s fiscal 2017 net profit is expected to jump 21% for a second straight record year.
One concern on the horizon is the yen’s strength. Many companies are assuming an exchange rate of 110 yen to the dollar for the January-March quarter, but the market has fluctuated of late. Export-reliant businesses might see profitability deteriorate if the yen continues to strengthen.